Cardiologists file whistleblower lawsuit against Texas hospital over illegal patient referral program

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by Jay Pate

Drs. Dakshesh Parikh, Harish Chandna, and Ajay Gaalla are cardiologists who formerly practiced at Citizens Medical Center, a county-owned hospital in Victoria, Texas. They have filed a whistleblower lawsuit under the False Claims Act against Citizens, the hospital’s administrator, David Brown, and a cardiologist employed by the hospital, Dr. William Campbell, Jr. The lawsuit alleges numerous False Claims Act violations concerning improper incentives for patient referrals.

The False Claims Act permits a private person to bring a lawsuit on the government’s behalf against a person who has presented a false claim for payment from the United States. The person who initiates such a suit is called a “relator.” Such a claim can be asserted against anyone who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval,” or “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.”

The lawsuit alleges that the hospital, at Brown’s direction, paid bonuses to emergency room physicians in exchange for the referral of Medicare and Medicaid patients to the hospital’s chest pain center. The suit alleges that Brown offered, and Campbell accepted, an above-market guaranteed salary and discounted office space rental in exchange for Medicare and Medicaid patient referrals to the hospital. The suit also alleges that Brown implemented a bonus system wherein gastroenterologists who participated in the hospital’s colonoscopy screening program received bonus compensation for referring patients to the hospital.

The relators allege that Brown and Campbell knew that these quid pro quo arrangements violated the Anti-kickback Statute, federal health care programs, 42 U.S.C. § 1320a–7b, and the Stark Law, 42 U.S.C. § 1395nn, which prohibits submitting claims to federal health care programs if the services were furnished pursuant to referrals from physicians with whom the servicing entity has a financial relationship. Accordingly, the relators assert the False Claims Act was violated when Brown and Campbell submitted claims to the government for payment from Medicare and Medicaid for these services in violation of the FCA because such claims were knowingly falsely certified to be in compliance with healthcare laws and regulations.

Brown and Campbell, as employees of a county-owned hospital, moved to dismiss the complaint based upon “qualified immunity” that is available to government employees. The district court denied the motion, finding qualified immunity categorically unavailable against False Claims Act claims. Brown and Campbell appealled.

On appeal, the Fifth Circuit found it unnecessary to determine whether qualified immunity was categorically unavailable as defense to False Claims Act actions. U.S. ex rel. Parikh v. Brown, No. 13-41088 (5th Cir. August 11, 2014). The court of appeals affirmed the district court by concluding that, assuming that qualified immunity is an available defense, Brown and Campbell are not entitled to qualified immunity against the claims asserted. Id.

To overcome a government official’s qualified immunity, the plaintiff must plead facts showing that the official violated a statutory or constitutional right and that the defendants’ actions were objectively unreasonable in light of the law that was clearly established at the time of the actions complained of.

The Fifth Circuit held that the relators have born their burden. First, the relators had sufficiently pleaded that the defendants violated the False Claims Act by submitting, or conspiring to submit, claims for payment while knowingly falsely certifying compliance with the AKS and Stark Law. Second, the courses of conduct allegedly taken by Brown and Campbell were objectively unreasonable in light of clearly established law.

Specifically, the Fifth Circuit referenced its decision in United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899 (5th Cir. 1997). In that case, the court held that a claim for services rendered in violation of the AKS and Stark Law constituted a false claim within the purview of the False Claims Act. Thus, according to the Fifth Circuit:

In light of our decision in Thompson, every reasonable official would understand that the FCA is violated when (1) “the government has conditioned payment of a claim upon a claimant’s certification of compliance with, for example, a statute or regulation,” and (2) the official “falsely certifies compliance with that statute or regulation.” …. This clearly established statutory right is precisely what Relators alleged [Brown and Campbell] to have violated.

U.S. ex rel. Parikh, No. 13-41088. Accordingly, the Fifth Circuit held that Brown and Campbell are not entitled to qualified immunity. The district court’s denial of Brown and Campbell’s motion to dismiss based upon qualified immunity was affirmed and the case returned to the district court for further proceedings.

Whistleblowers’ Rights Are Protected By Federal Law

The False Claims Act provides significant financial incentives to encourage private citizens to come forward with information regarding fraud against the government. The government has recovered billions as a result of False Claims Act lawsuits, and hundreds of millions have been paid to the private whistleblowers that made the lawsuits possible.

If the government decides to join in a False Claims Act lawsuit, the relator who initiated the suit is generally entitled to receive between 15 and 25 percent of the proceeds of any judgment or settlement in the case. And, if the government elects to not join the lawsuit, the relator is generally entitled to 25 to 30 percent of the amount recovered in the suit on behalf of the government.

Anyone who has information that a business or person has knowingly submitted or caused the submission of false or fraudulent claims to any branch of the United States government can potentially help file and pursue a lawsuit under the False Claims Act. The “whistleblower” (called a “relator”) does not have to have been personally harmed at all. The relator just needs to be aware of the false or fraudulent conduct.

The lawyers at Heygood, Orr & Pearson represent clients who have witnessed fraud first-hand and wish to file a “qui tam” or whistleblower lawsuit against the corporations or individuals who were responsible. For example, our lawyers successfully negotiated a $1.75 million award for a whistleblower in a large tax fraud case.

If you have questions about how to pursue a claim under the False Claims Act, please let us know. You can reach us by calling our toll-free hotline at 1-877-446-9001, or by filling out our free legal consultation form on this website.